Does rise in demand show the need for investment in buy-to-let?

Does rise in demand show the need for investment in buy-to-let?

Investors in the UK's buy-to-let sector will continue to see strong levels of demand throughout the coming year, according to the latest predictions for the property market in 2015. Forecasts also seem to suggest that even more investment could be needed, with a supply and demand issue set to come to the fore yet again. 

There was a fall in demand towards the end of last year, which would no doubt have had buy-to-let landlords worried about the future of their investments. However, experts have stated that this was little more than a seasonal blip, and one that was to be expected at that. According to the National Association of Estate Agents (NAEA), in fact, demand is increasing in 2015, with more and more agents expecting to see greater demand for homes this year. 

Almost half of all NAEA members reported in December's predictions that they are expecting to see a rise in demand this year. And while much of this growth in the number of people looking for homes will be coming from buyers, there's reason to believe that it will provide a sizeable boost to the rental market. 

After all, following double-digit growth in market values in 2014, any swell in demand is likely to push prices higher once again. This could leave many new households potentially unable to afford to buy, leading them into the rental sector instead and giving landlords far more for their money. 

On top of this is the election. Although sentiment for buying a home is on the up, the majority of experts are expecting the first half of 2015 to see a slowing in the number of people actually buying properties. 

With uncertainty reigning, particularly in London where many buyers will be worried about the potential for a mansion tax, a swathe of people who would normally buy will look to rent a home in the first five months of the year, giving landlords a strong incentive to put money into what is already a red hot market in order to capitalise on demand. 

The NAEA also said that the property market in general needs to see more houses coming to the fore. As the number of new households being formed continues to grow at pace, the country needs to be keeping up by building enough new homes. 

"With agents predicting the housing shortage crisis to potentially worsen in 2015, the general election will be a pivotal event for the housing market next year, with all three main parties pledging to build more homes should they be elected," it said. 

Of course, there are a number of other issues, aside from the election, that could also cause changes in the buy-to-let sector, should they become a reality. 

An example of this will be the potential for interest rate changes. Both June and October are being earmarked by experts as the time when the central bank may decide to increase the base rate from its historic low. Should it do so at either time, then the number of people who are able to afford to get themselves a mortgage will fall, increasing demand for landlords yet again. 

This is being touted as the biggest influencing factor in the market this year, with 34 per cent of NAEA agents predicting that this will come into play in 2015. By way of comparison, some 32 per cent said that stamp duty alterations will have an impact, and the same number said that the election will be a factor. 

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